Logistics giant ProLogis has raised a €637m war chest to double its 3.8m m2 pan- European portfolio of distribution space.
The European Properties Fund already operates 205 distribution facilities across 11 European countries and the additional capital created by its second funding will give it the capacity to expand to over €4.5bn. The move is the latest European offensive for the fund, which has expanded rapidly since its launch in 1999.
ProLogis will invest the extra capital in expanding its network of distribution hubs to meet the rise in demand caused by EU enlargement in 2004, according to president of international operations Jeff Schwartz.
“The continuing need to optimise distribution networks and the expansion of the EU continue to be the key drivers of demand for distribution space,” said Schwartz.
The European Properties Fund has been a key force behind the aggressive expansion of Prologis across Europe, which has seen its total portfolio increase from 93,000m2 in 1997 to over 4.3m m2 today.
“The focus will be on central Europe,” said ProLogis vice-president Peter Wittendorp. “We already have a presence in some of those countries, such as Poland Hungary and the Czech Republic, and we want to expand in these places. We are seeing a lot of activity in these countries not just in terms of logistics, but also from manufacturing companies looking to create hubs there and transport goods back into Europe.”
Prologis aims to achieve returns of between 12.5% and 13% from its European Properties Fund.
Existing fund investors accounted for nearly three quarters of the fund’s new equity, while the rest came from several new sources, including ATP, Danish pension fund Kommunernes Pensionsforsikring, Immowest Immobilien Anlagen of Austria, and the US-based Metropolitan Life Insurance Company.
ProLogis will continue to have the largest equity interest in the European Properties Fund, its current stake standing at around 30%.
